(Recasts lead, and adds details throughout; updates share price)
By F. Brinley Bruton
LONDON, June 27 (Reuters) - British engineering group Tomkins Plc reported a nine percent fall in annual profit on Thursday, in line with market forecasts and said the worst appeared to be over for its major car-making clients.
"The outlook is difficult... (but) it looks like we're now at the bottom of the trough," Tomkins' new chief executive, Jim Nicol, said during his first conference call with reporters since joining the company in February.
The North American car industry, which accounts for about 17 percent of its sales, showed signs that it would likely head into recovery next year, he said. U.S. automakers were already suffering from a downturn when the September 11 attacks on the United States soured business further.
Investors have been expecting Nicol to turn the company around. Tomkins, which has been reinventing itself, makes wheels, axles, windscreen wipers, valves, hydraulic hoses, ventilation components, taps, pipe fittings, aluminium and wood window frames, and conveyor systems.
Pre-tax profits before goodwill and exceptional items fell about nine percent to 272.5 million pounds ($415.3 million), in line with market estimates of 261-280 million pounds, according to research firm Multex.com.
After goodwill and exceptional items, pre-tax profits jumped 84 percent in the year ended April 30 to 264.4 million pounds, reflecting heavy exceptional losses the year before. The 2000/01 result included losses on the sale of gun maker Smith & Wesson. It also sold bakery business Rank Hovis McDougall in that year.
Sales from continuing operations rose 1.2 percent to 3.4 billion pounds. The annual dividend was unchanged at 12 pence per share.
ON THE LOOKOUT
The company, having completed its strategic review, was now looking at buying opportunities, Nicol said.
"We have spent a fair amount of time analysing acquisition opportunities... (but) we haven't seen anything we want to pull the trigger on," he said.
Tomkins is unlikely to buy back shares anytime soon, Nicol said. Returning equity to shareholders has become popular with many companies in recent months.
"A share buy-back is only one way to deliver shareholder value... it makes sense when the share price is depressed," Nicol said.
Shares in Tomkins rose 1.36 percent to 261-1/4p on Thursday. The stock has outperformed the FTSE MidCap 250 Index by 37 percent in the past year.